Mid-market UK hotel sector set for consolidation

The UK’s mid-market hotel sector is set for further consolidation as hospitality groups continue to improve their balance sheets amid ongoing economic headwinds.

Hospitality consultancy HVS says that several hotel groups have a for-sale notice on them, and more are likely to in the near future. “The banks are now confident enough in the market to consider a sale likely, and are putting groups on the market that other operators and investors are likely to look at,” said Russell Kett, chairman of HVS London.

Principal-Hayley is on the block with a price tag of £500m, and could be bought by a private equity company for use as a consolidation vehicle, HVS suggests.

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The De Vere Group is selling what it views as non-core hotels and revamping its Village Hotels chain with a view to selling off the business in a few years. Q Hotels is selling six of its smaller hotels on top of the sale of Jury’s Inn to a private buyer.

“These companies could provide an interesting opportunity for an investor to gain a foothold in the provincial UK mid-market, but there are additional possibilities for an investor with deeper pockets to purchase, say, two or more of these groups. It could then carry out some overdue capital expenditure and apply a more distinctive and recognisable brand to those which ‘fit’, dispose of those that don’t, and derive additional bottom line earnings and value from the economies of scale and branding benefits,” Kett suggested.

 

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